Florida insurance officials have agreed that three Bermuda-based reinsurers can participate in Florida’s insurance marketplace without having to post millions of dollars in extra collateral.
The Office of Insurance Regulation’s (OIR) agreements are with Ace Tempest Reinsurance Ltd., Hiscox Insurance Co. Limited, and Partner Reinsurance Co. Ltd.
State officials say these foreign reinsurers, along with three others for which collateral requirements were previously lowered, are financially strong enough such that they do not have to post 100 percent collateral, which the state may still require of other foreign and unaccredited reinsurers.
Under current law, U.S.-licensed and Florida-accredited reinsurers do not have to post collateral and when an insurance company buys reinsurance from one of these domestic reinsurers in the state, the insurer gets a favorable accounting credit.
In 2007, Florida lawmakers, hoping to increase the number of reinsurers doing business in the state, passed legislation that authorized the OIR to establish lower collateral requirements for alien (non-U.S.) reinsurers that are highly-rated and financially sound. The OIR may now approve collateral requirements on a scale of from 0 to 100 percent, depending upon the strength of the foreign reinsurer’s financial ratings.
The OIR has now authorized a total of six reinsurance companies to operate in Florida under reduced collateral terms. The three companies approved earlier this year include Hannover Reinsurance, Hannover Insurance (Bermuda), and XL Re Ltd.
“Florida has played a key role in modernizing the U.S. reinsurance market,” said Insurance Commissioner Kevin McCarty. “These collateral agreements are intended to encourage additional investment in Florida’s property insurance marketplace.”
As of the Dec. 31, 2009, all three companies had in excess of the $100 million surplus required under Florida statutes. Ace Tempest Re reported $5.1 billion in surplus, Hiscox reported $808 million in surplus, and Partner Re reported $3.4 billion in surplus. According to McCarty, all three companies also secured a financial rating indicating financial strength from at least two nationally recognized statistical rating organizations.